Yellowknife (Feb 17/06) - The city's diamond cutting and polishing industry is broken and the minister responsible doesn't know how to fix it.

This startling revelation came out of the Legislative Assembly this week after Yellowknife MLAs Bill Braden and Dave Ramsay took turns hammering Industry Minister Brendan Bell over the problems with the supply of rough diamonds for three of Yellowknife's four cutting and polishing factories.

Braden said the difficulty of getting a good supply of Northern rough diamonds has put the "cutting and polishing industry into a little bit of rough weather," said Braden.

Last week, Bob Bies, director of Arslanian Cutting Works, told Yellowknifer it's sometimes cheaper to purchase diamonds from Antwerp, Belgium, than from the NWT mines.

"We have to understand the problem. I don't think we are entirely there yet," Bell eventually replied after continued prodding.

When the Ekati and Diavik mines were still in the planning stages, recalled Braden, one of the biggest opportunities the territorial government went after was creation of a secondary diamond cutting and polishing industry.

Braden said the deals the government signed with Diavik's owners Rio Tinto and Ekati's BHP Billiton are powerless to ensure a supply of rough gems for Yellowknife factories.

"Our socio-economic agreements with the two existing mines do stipulate that they make rough diamonds available for secondary, value-added industries here in the NWT," said Bell.

A copy of the 22-page agreement the GNWT signed with BHP in 1996, however, does not contain a single reference to "rough diamonds" let alone a guaranteed supply for Northern value-added industries.

This was also confirmed by Bies, who previously spent seven years as a diamond analyst with the territorial government.

"In the Rio Tinto deal, for example, price and size are specified, but there is no mention of quantity," he said. "There is no official agreement with BHP, just a loose understanding."

Braden suggested a government monitor needs to be put in place if the GNWT ever hopes to enforce what few guidelines it did manage to establish.

"How are we going to be able to get involved in fixing this problem if we don't have an agreement that allows us to have a meaningful role?" said Braden. "We've set out the expectation, or the requirement, that these (rough stones) are sold, but we don't have the ability to monitor or enforce these conditions."

Bell later down-played this idea calling the diamond trade "too secretive," but insisted NWT-certified gems have found a niche and the city's cutting and polishing factories will survive.

"I am not going to be content to say we should be happy to have 150 people employed," Braden said. "I would like to see hundreds more engaged."

The Department of Industry, Tourism and Investment's own website seems to confirm Braden's assertion, estimating diamond manufacturing is currently worth about $9 million, but would total $20 million if the factories were operating at peak capacity.